Highlights of  Current Economic Scene

The Reserve Bank of India has lowered the growth forecast to 7% with a “downward bias” and predicted a fall in exports and corporate profitability. The slowdown is brought about by lower industrial production caused by the global crisis.

Commerce and Industry minister, Kamal Nath said that domestic demand would drive Indian economy despite global slowdown, however Indian economy is not entirely based on exports market. Of course we cannot decouple are self from global downturn but can continue to keep are domestic demand. He commented that Central government has announced $4 billion for infrastructure projects; even the stimulus packages announced by the government are sufficient to stop the impact of the meltdown. Lastly, he even said that government expenditure will surely increase; leaving a wide fiscal gap, but according to him the gap is manageable.

The economic think-tank National Council of Applied Economic and Research (NCAER) estimated the countries GDP growth rate for the current fiscal year to 6.7%which is lower than 7.6% estimated earlier. The overall GDP growth is projected to decline by 0.9% points in 2008-09 as compared to the projections made in October 2008. The reason for the downward revision is due to the fall in the pace of private expenditure on investment and consumption, but some improvement in the next fiscal (2009-10) is expected to be marginally better at 6.9%.

International Monetary Fund (IMF) has revised a growth forecast for the Indian economy to 5.1% in 2009, again which is lower than its earlier prediction of 6.3%.

Prime ministers panel has also scaled down its projections for economic growth to 7.1% from its earlier estimation of 7.7%.

Agriculture

The minimum support prices (MSP) for the standing 2008-09 wheat crop — to be marketed from April onwards — has been increased by 8% to Rs 1,080 per quintal. The new price is likely to aggravate the problem of overflowing public grain inventories, which has touched 180.62 lakh tonnes as on January 1, as against the normative minimum buffer of 82 lakh tonnes for this date. The Cabinet Committee on Economic Affairs (CCEA) has also hiked the MSPs for rapeseed-mustard, gram, barley and masur (lentil), while leaving the same unchanged for safflower. The new MSPs are in line with the recommendations of the Commission for Agricultural Costs & Prices (CACP).

The government has extended the repayment date under the farm loan waiver scheme by six months to March 2009 instead of September 2008. As part of the Rs 60,000-crore relief package for farmers announced in the budget 2008-09, farmers who owned 5 acres and more were required to settle 75 per cent of their dues, with the government waiving the remaining 25 per cent or Rs 20,000, whichever was higher. The loans (first instalment) were required to be repaid by September 2008. However, under the revised plan, farmers will now have to pay the first instalment of their loan in March 2009. The decision was taken considering that the initial deadline clashed with the new crop cycle. The move is expected to help banks make less provisioning on as much as Rs 32,000 crore (Rs 320 billion) of outstanding debt to nearly 6,000,000 farmers who own more than 5 acres of land. Analysts have apprehensions that the extension may fuel speculation of an additional loan waiver ahead of the general elections and the possibility of default, too, may rise.

The government of Kerala has plans to introduce a pension scheme for farmers above the age of 60 years. The pension plan, namely ‘Kisan Abhiman Scheme’, that envisages a monthly pension of Rs 300 to farmers who have taken up agriculture as the only means of livelihood for a period of at least 10 years and are not benefited by any other welfare scheme. 10,000 farmers are likely to get pension under this scheme in the first year. They would also be eligible for getting Rs 25,000 for conducting the marriage of their daughters.

The government of West Bengal has plans to substitute20 % of chemical fertiliser by bio-fertiliser by the end of the 11th Five Year Plan. The state government has written a letter to the Centre urging for subsidy for the use of bio-fertiliser. Chemical fertilisers get a subsidy of about 80%.

Natural rubber production has fallen by 14% to 96,200 tonnes in December 2008 from 111,730 tonnes in December 2007 due to decline in the prices following industrial recession partially offsetting major increase in output in the first eight months of this financial year and also because of dry weather conditions affecting the production adversely. The production between April and December period, however, touched 669,080 tonnes, 8% higher than 620,060 tonnes in the same period the previous year. Further, the demand for natural rubber has decreased due to economic slowdown along with a 30% rise in the import of cheaper Chinese tyres. Domestic tyre manufacturers have cut down on production on recession fears. Consumption, too, has declined to stand at 66,000 tonnes from 73,110 tonnes in December 2007. Meanwhile, the Rubber Board has revised its natural rubber production and consumption targets for the April -March 2008-09 from 8.75 lakh tonnes to 8.61 lakh tonnes and from 8.99 lakh tonnes to 8.62 lakh tonnes, respectively owing to slowdown in demand in the ongoing economic downturn.

Global cotton consumption is likely to fall by 11% in the current cotton season ending August 2009 due to rising production costs of the textile mills, strengthening of local currencies against the dollar and low enquiries from the recession-hit countries. Cotlook has projected a substantial drop in cotton yarn offtake in several key Asian markets. India ’s consumption for the season is pegged at 6.8 million tonnes against the previous season’s 7.2 million tonnes, while the production is likely to drop to 4.93 million tonnes from 5.3 million tonnes during the corresponding period of previous year. Meanwhile, data available with the International Cotton Advisory Committee has revealed that global cotton exports are expected to fall by 6.47% to 7.8 million tonnes in 2008-09 due to slowing demand from textile importing countries. The apex cotton body has also reiterated that world cotton exports would decline by 6.47% in 2008-09 owing to declining mill use. Mill use is likely to fall by 4% to 10.5 million tonnes in Mainland China , the world’s largest consumer.

Continued diversion to gur producing units and better price realisation have enabled the sugar millers in Uttar Pradesh, the second biggest sugar producing state in the country, to make prompt payment to the sugarcane growers in the current season (October-December). According to the state cane commissioner, the state sugar mills, as on 23 January, have cleared nearly 98% (Rs 3,210 crore) of the total cane price payable (Rs 3,277 crore). During the last two season (2006-07 and 2007-08), mills in the state had piled up arrears to the tune of a few thousand crore, and the state government had to resort to coercive measures against the mills to ensure timely payments. Owing to staggered payment by the mills, sugarcane acreage in the state declined by over 20 per cent in sugarcane year 2008, as farmers shifted to better paying crops like paddy and oilseeds.

More than 25,000 tomato farmers have incurred severe losses in the year 2008 due to the premature ripening of the fruit in plantations spread across thousands of acres in Kanpur (Uttar Pradesh) and areas in its vicinity. The crop, which fetched over Rs 1,200 per quintal in crop year 2007, is now selling for less than Rs 50 per quintal, because of the surge in arrivals due to an early harvest. Under normal conditions, a mere 30-40% of the total crop is ready to enter the market at this time of the year. This year, however, around 80% of the produce has already been sold to avoid rotting. Agriculture scientist at the Chandra Shekhar Agricultural University (CSA) is of the opinion that the extreme heat during the day and cold at night has resulted in premature ripening and if this weather conditions persist, the entire local produce may get exhausted in the short period leading to shortage thereafter. The peasants in the state are severely hit by the lowest prices in the last five years, and are not being able to recover even 25% of their investments.

Infrastructure

The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 247.4 in December 2008 and registered a growth of 2.3% compared to a growth of 3.2% in December 2007.  During April-December 2008-09, six core-infrastructure industries registered a growth of 3.5% as against 5.9% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a growth of (–) 0.3% in December 2008 compared to a growth rate of (-) 1.4% in December 2007. The Crude Oil production registered a growth of (-) 0.5% during April-December 2008-09 compared to 0.3% during the same period of 2007-08.

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of 3.0% in December 2008 compared to growth of 1.9% in December 2007. The Petroleum refinery production registered a growth of 3.7% during April-December 2008-09 compared to 7.5% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 9.4% in December 2008 compared to growth rate of 8.4% in December 2007. Coal production grew by 10.1% during April-December 2008-09 compared to an increase of 3.5% during the same period of 2007-08. 

Electricity generation (weight of 10.17% in the IIP) registered a growth of 0.7% in December 2008 compared to a growth rate of 3.9% in December 2007. Electricity generation grew by 2.6% during April-December 2008-09 compared to 6.6% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 11.6% in December 2008 compared to 4.4% in December 2007. Cement Production grew by 7.0% during April-December 2008-09 compared to an increase of 7.7% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 0.8% in December 2008 compared to 1.8% in December 2007. Finished (carbon) Steel production grew by 2.7% during April-December 2008-09 compared to an increase of 6.4% during the same period of 2007-08.

Inflation

Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 17th January 2009 rose by 0.2 percent over the week.

The annual rate of inflation, calculated on point-to-point basis, stood at 5.64 percent for the week ended January 17, 2009 as compared to 4.45 percent during the corresponding week of the previous year.  

The index for major group primary articles declined by 0.1 decline in prices of fish-marine, gram, condiments & spices, raw rubber, rape & mustard seed, sunflower, lime stone and magnetite.  

The index for major group fuel, power, light and lubricants rose by 0.1 percent due to higher prices of aviation turbine fuel (4%) and furnace oil (1%).

The index for major group manufactured products rose by 0.3 percent due to higher prices of oil cakes, gur, sugar, beer & alcohol, soft drinks, Hessian & sacking bags, Hessian cloth, caustic soda, and zinc.

The final wholesale price index for ‘All Commodities’ for the week ended November 22, 2008 stood at 233.4 as compared to 233.7 and annual rate of inflation based on final index, calculated on point to point basis, stood at 8.26 percent as compared to 8.40 percent.

Financial Market Developments

Capital Markets

Primary Market

After a lull of over three months, the primary market is warming up for the launch of two public issues - Gemini Engi-Fab and Edserve Softsystems - which will expected to open for subscription next week. Engineering and fabrication company Gemini Engi-Fab plans to issue about 55 lakh shares to raise about Rs 44 crore, Edserve Solutions, a web-learning company, is entering the capital market floating 41 lakh shares to raise over Rs 20 crore. Bad market conditions and fear of not getting optimal response to the initial public offerings (IPO) has forced many companies to postpone their money raising plans even at the cost of expiry of the validity period with the markets regulator.

Secondary Market

The market ended the truncated week with positive gains. Buying frenzy in index pivotals, coupled with short covering of open positions ahead of January 2009 derivative contracts on Thursday (29 January 2009) triggered a solid rally in key benchmark indices in the first two session of the week. The market has been closed on Monday (26 January 2009) on account of the Republic Day. Obama's stimulus plan boosted sentiment across financial markets during the past week. The US House of Representatives passed an $825 billion stimulus plan in President Barack Obama's first legislative achievement since taking office last week, with the debate now shifting to the Senate. Inflation inched up this week, but that did not hurt investor sentiments. Inflation for week ended 17 January has been at 5.6% marginally higher than 5.6% in the previous week. The BSE 30-share Sensex rose 749.9 points or 8.6% to 9,424.2 in the week ended 30 January 2009. The BSE Mid-Cap index rose 91.3 points or 3.2% to 2,941.5 and the BSE Small-Cap index rose 83.5 points or 2.6% to 3,339.1 in the week. The S&P CNX Nifty rose 103.5 points or 3.7% at 2874.8 over the week and the Defty was up 7.9%, as the rupee recovered from below the 40-level.

Among the sectoral indices of BSE, all the indices registered positive gains over the week, except Healthcare index, which posted negative gains. Interest rate sensitive stocks such as banking and reality performed well on expectation of rate cuts. Metal index gained 15% over the week despite poor Q3 results followed by Reality and Oil & Gas (10% each).

FIIs were net buyers to the tune of Rs 60.6 crore during the week.

The Securities and Exchange Board of India (SEBI) is expected to take up two critical issues at a board meeting scheduled 2 February. One of them concerns raising margins that promoters must pay for optionally convertible warrants and the other on waiving the open-offer pricing rule for potential buyers of scam-hit Satyam Computer. Promoters issuing optionally convertible warrants to themselves currently have to deposit 10% of the value of the warrants as margin. Optionally convertible warrants give promoters an option to convert warrants into shares at a pre-determined price. Promoters generally convert the warrants in a rising market but they tend to let them lapse when markets fall, as a result of which the 10% margin is also forfeited.

The Reserve Bank of India (RBI) has turned down suggestions to relax rules for recognising non-performing assets (NPAs) by doubling the duration to 180 days. RBI feels such a move will affect banks’ financial health. At present, banks treat a loan as an NPA if the payment is overdue for 90 days. Companies, especially small and medium enterprises (SMEs), had suggested that a loan should be treated as an NPA if it was overdue for 180 days. SMEs had suggested the move because they were facing cash flow problems due to a slowdown in demand in domestic and overseas markets, resulting in repayment problems. As per sources close to developments, the central bank has been unlikely to agree to this relaxation because of its efforts to align prudential norms in Indian banking with international standards.

According to the data collected from Bloomberg, the international equity funds for India have seen a decline of 63% in their net assets value (NAV) in the last one-year. Currently, 131 international equity funds for India , which are listed on the Luxembourg exchange, have witnessed a 62.8% decline in its NAV at $22,79 billion compared to a year ago level of $61.2 billion. These funds are based in Luxembourg , Mauritius , South Korea , Japan and USA and are mobilising resources from the overseas investors to invest in equity markets of major countries. The India funds, which operate from Japan, top the value erosion chart with an average decline of 69% decline in NAV, followed by USA (63%), Luxembourg and Mauritius (62% each), Australia and Singapore (61% each), and South Korea (54%). These international equity funds, which were formed with the sole objective of investing in emerging equity markets, have been affected adversely due to the US sub-prime crisis.

Long-term bond funds are poised to deliver good returns this year on the back of softening interest rates and present themselves as an attractive investment option. According to credit rating agency Crisil, investors in such funds are likely to benefit when the interest rates fall as returns in long-term bonds increase sharply in response to the declines in interest rate. Debt funds (including gilt funds) have already witnessed inflows of more than Rs 5,000 crore in December 2008 alone. A review of the last quarter of 2008 revealed a better performance by debt funds. The Crisil MF-Gilt Index saw gilt funds giving a return of 21% and Crisil Fund-dX saw long-term bond funds delivering over 8% return in October and December 2008.

 Derivatives

The NSE has removed 15 stocks from the list of eligible securities for Futures & Options (F&O) trading as the stock failed to meet the SEBI eligibility criteria for trading in the derivatives market. However, the existing un expired contracts for the month of January, February and March would continue to be available for trading till their respective expiry and new strikes would also be introduced in these existing contract months. With these removals, only 253 stocks would be available for trading in the F&O segment.

The truncated week saw a bout of short-covering of open positions in the closing week of January derivative contracts. Short covering drove the index up past what may be a key resistance. Volumes were low, especially given that it was settlement week. Advances marginally outnumbered declines. Carryover was moderate but prices were on the uptrend on Day 1 of the February settlement.

Turnover remained moderate at Rs 34,205.27 crore in the F&O segment. The Nifty Feb future closed weak at 2738 against the spot close of 2766.65, widening the discount to about 28 points. It added about 19.85 lakh shares in open interest positions, most of which were on the short sides. Not only index, most of the individual stock futures added short positions; NTPC, in fact, witnessed drop in open interest positions. It shed about 13 lakh shares in open interest and closed in discount at 178.4 against the spot close of 181.2.Among the index options, calls accumulated open positions, indicating the emergence of call writers. Nifty 2800 saw huge accumulation of about 17 lakh shares. On the other hand, puts such as 2700 and 2800 witnessed drop in open interest positions, indicating profit booking. However, 2500 and 2450 puts accumulated open positions, indicating that traders are switching to lower strikes.

The Junior was ahead 2.6% while the BSE 500 was up 6.9% and the Midcaps 50 rose 7.9%. The FIIs were marginally negative in their weekly positions while domestic institutions were significant net buyers. The Bank Nifty is probably the key to the wider market’s movements.

A low-volume settlement ended on a bright note due to short-covering that may have translated into some impulse buying. The cash market technical signals were balanced on the weekend but there were some signs of weakness in the derivatives market. Carryover has been moderate though OI improved on Friday. The liquid index futures were all at some discount to their respective underlyings and in the Nifty, the March future has been at a discount to the February contract. It was in general, a low-volume settlement with even lower open interest (OI). Unfortunately, the VIX has looked more and more out of sync with reality in the last eight days of every settlement due to its flawed methodology of higher weightage on far-month positions. The over put-call ratio (PCR) has moved to around 1 while the PCR in terms of OI for Nifty options is around 1.2. In fact, the PCR (OI) for February is around 1.5. About 57% of OI is in the February series.

 Government Securities Market

Primary Market

The 6.05% paper expiring in January 2019 will become the new benchmark for the bond market, starting 2 February. On 30 January, RBI said that it had set a cut-off yield of 6.05% at the auction of the new 10-year security maturing in 2019. The 10-year security has traditionally been the most liquid paper in the domestic bond market and is widely used by traders to take a view on interest rates.

The RBI auctioned 2019 paper maturing in 10-year on 30 January 2009, for the notified amounts of Rs 4,000 crore with the cut off yield of 6.05%.

The RBI auctioned 91 Day T-Bills and 364 day T- Bills for the notified amounts of Rs 8,000 croe and 1,000 crore, respectively on 28 January 2009. The cut-off yield for the 91 day T-Bills has been set at 4.79% and for 364 day T- Bills has been set at 4.59%.          

Under market stabilization scheme (MSS) the RBI repurchased 7.55% 2010 maturing in one year for the notified amounts of Rs 3,000 crore with the cut off yield of 4.29% on 29 January 2009.        

On 30 January 2009, RBI re-issued 7.56%2014 and 6.83%2039 for the notified amounts of Rs 3,000 crore each with the cut-off yield at 6.02% and 7.35%, respectively.

Secondary Market

Call money rates towards the weekend were down to 2%. Bonds firmed during the week on the back of increased government borrowings and the RBI calibration of liquidity expansion in the banking system. Rumours that the government is set to announce extra borrowings in coming days, put pressure on bonds. Liquidity expansion was closely regulated with banks parking more than Rs 56,000 crores with RBI. However, despite the calibration, liquidity has been comfortable. This has been evident from the weekend liquidity adjustment facility auctions where the recourse to the reverse repurchase window amounted to Rs 56,510 crore.

As per the data from the SEBI shows that there has been a surge in trading volumes in the corporate bond market since the middle of December. Figures between January 2007 and 2009 shows that the average trading per month has been Rs 5,000 to Rs 8,000 crore. The highest trading was in January 2008 when bonds worth Rs 14,547 crore were traded. This has gone up to Rs 25,102 crore in December 2008 and Rs 24,609 crore till January 28 2009.

With the market expecting a rate cut and RBI maintaining status quo on rates in its third quarter monetary policy review, the corporate bond yields have witnessed upward movement by almost 100 basis points. The trading volume in corporate bonds has also fallen by almost 50% post the credit policy announcement. The market is now looking forward to the upcoming bond issuances, which is likely to kick off during the quarter. On Thursday, the corporate bond yields rose to the highest in more than a month, ahead of the government bond auction, which is to be announced on Friday.

The RBI has extended the time for customer and inter-bank transactions to use Real Time Gross Settlement System (RTGS) by 30 minutes on Saturdays to encourage higher usage of the electronic payment system. The RTGS Standing Committee has decided to extend RTGS timings for customer’s transactions on Saturdays from 12:00 noon to 12:30 hours and for inter-bank transactions from 14.00 to 14.30 hours. The new timings have already become effective from January 10, 2009.

 Bond Market

During the week under review, three FIs/Banks one NBFCs and three Corporates tapped the bond market through issuance of bonds to mobilize an amounts of Rs 2300 crore with grenshoe option of Rs 30 crore.

The government may have to issue additional oil bonds worth Rs 11,000 crore to state-run oil marketing companies — Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) — in the fourth quarter of 2008-09. The bonds will compensate oil companies for keeping retail prices of petrol, diesel, kerosene and cooking gas below the cost during the year. The combined loss (under-recovery) of three companies are estimated at Rs 101,445 crore for 2008-09.

 Foreign Exchange Market

Rupee completed a monthly loss as overseas funds dumped stocks on concerns that the global economic slump will hurt growth and erode earnings. The currency extended last year’s 19 percent slide, the steepest since 1991, as the RBI lowered the growth forecast to 7 percent for the year ending March 31, the slowest in six years. The rupee declined to Rs 48.88 per dollar from Rs 48.78 on December 31, according to data compiled by Bloomberg.

Forward premia across all tenures remained stable, as a result. One, three, six and 12 month premia ended last week at 3.70% (3.81%), 3.10% (3.23%), 2.38% (2.26%) and 1.92% (1.84%).

The country’s foreign exchange reserves decreased by $4.55 billion to touch $247.621 billion for the week ended January 23. The reserves have fallen for the third consecutive week.

 Commodities Futures derivatives

On 29 January 2009, the National Commodity & Derivatives Exchange of India (NCDEX) filed a writ petition against the Forward Markets Commission (FMC) challenging the interim stay granted by the regulator regarding the revision of transaction charges on Wednesday. It is for the first time in the history of commodity futures markets that an exchange has challenged the regulator’s order. The exchange filed the petition in the Bombay High Court and the petition will come up for admission on February 2. The plea will come up on Monday before the two member bench comprising the Chief Justice of the Bombay High Court and Justice DY Chandrachud.

The FMC has once again stayed the NCDEX’s decision to slash transaction charges. NCDEX, the country’s second largest commodity exchange, had issued a circular earlier in the day informing members about its decision to slash transaction charges by splitting the working hours between 10 am and 5 pm for agricultural commodity traders and from 5 pm to the end of the working day for non agro-commodities traders. The exchange reduced uniform transaction charges to Rs 3 per lakh of value of all trades in all commodities between 10-5 pm, while the same was cut to 5 paise per lakh of value of all trades after 5 pm till the end of trading. The transaction charge has been reduced much more for trading after 5 pm when its rival Multi Commodity Exchange (MCX) records most of its trading volume. Interestingly, commodities like precious metals, base metals and energy are the three segments in which NCDEX manages very low turnover while the three global commodities are traded heavily on MCX.

Oil marketing companies will be able to hedge their refinery margins (difference in crude oil and finished product prices) and end-products from crude oil. After getting the go-ahead from the FMC, the regulatory authority for forwards and futures markets in India , MCX has launched heating oil futures. This will open a window of opportunity for oil companies to hedge refinery margins and end products on MCX. So far, MCX had been providing a platform to oil exploration and marketing companies only to hedge volumes for crude oil. MCX launched hedging of heating oil or furnace oil yesterday.

 Public Finance

The latest data on Union government accounts for current fiscal so far (upto Dec 2008) reveals that while revenue deficit at Rs. 173830 crores accelerated by 343.3% mainly due to surge in subsidies, especially that in fertilisers and to some extent by the stimulus package for pushing the economy by increasing the plan expenditure. The fiscal deficit increased by 181.3%.

Up to December 2008, the non-plan expenditure at Rs. 426419 crores was 26.5% more than that in the corresponding period last year. This amount of expenditure is 84% of the budgeted expenditure. One silver lining is the substantial increase in the corporation and income tax during December 2008 as a resulted the corporation tax and income tax has achieved 64% and 50% of their respective budget estimates; still it was much less than the tax mobilised in December 2007.

 Insurance

With the rising cost of health cover, insurance companies are looking at innovative products to attract customers. The latest offering is top-up insurance that comes at almost half the premium. For instance, his employers’ provide any employee who wants medical insurance of more than what group cover can go for top-up premium. If the cost of hospitalization exceeds the limit provided by the employer, the insurance company will pay the extra amount. An individual too can ramp up his medical insurance cover from Rs 2 lakh to Rs 5 lakh by going for a top-up. The cost of additional cover would be less than what a new policy of the same amount would cost. At present, United India Insurance and Star Health and Allied Insurance are offering this product.

Banking

Bank of Maharshtra has posted a net profit of Rs 121 crore for the quarter ended December 31, 2008, which reflects a rise of 20% over Rs 100 crore recorded during the corresponding quarter of the previous financial year. During the quarter, the bank’s income rose to Rs 1,293 crore, an increase of 31%, compared with Rs 986 crore posted in the year-ago period.

Riding on strong net interest income, treasury gains and fee-based income, Bank of Baroda (BoB) has recorded a rise in its net profit by 41.4% at Rs 708 crore in the third quarter of the current financial year. Net profit was Rs 501 crore in corresponding period of 2007-08. In all, the bank’s global business increased 27.3% to Rs 2,95,815 crore.

Dena Bank’s net profit in third quarter increased by 38.9% at Rs 140 crore from Rs 101 crore recorded in the corresponding quarter in the year-ago period.

 Corporate

Reliance Power has bagged the Tilaiya ultra mega power project (UMPP) in Jharkhand by offering to supply power at Rs 1.77 per unit – the lowest quoted by the four companies in the fray. The next best bid for the Rs 16,000 – 18,000 crore project came from government owned NTPC, which offered to supply power from the pit-head coal project at Rs 2.39 per unit. There were two other bidders – Jindal Steel and Power (Rs 2.69) and Sterlite Industries that bid the highest at Rs 2.97 per unit. This is the third UMPP won by the Anil Ambani group company, after Sasan in Madhya Pradesh and  Krishnapatnam in Andhra Pradesh.

Mukesh Ambani-promoted Reliance Industries (RIL) has dropped its plan of setting up a 345 MW gas-based power plant at its Nagothane manufacturing unit.

Piramal Healthcare, formerly known as Nicholas Piramal, has acquired outstanding capital stock of US-based RxElite Holdings for $4.2 million (around Rs 22 crore).

Tata Steel, the world’s sixth largest steel manufacturer, has posted a 56.4% drop in third quarter net profit to Rs 466 crore from its Indian operation as slowing economic growth and the credit crunch prompted makers of cars and appliances to slash orders. The company has reported a drop for the first time in almost three years due to 13.8% fall in the volume of steel sold. Following the depreciation of rupee, the company has registered a foreign exchange loss of Rs 126.80 crore.

ONGC has reported an over 43% dip in its net profit for the October-December quarter on account of lower crude oil prices and higher subsidy burden. The lower-than-expected net profit of Rs 2,475 crore is due to a subsidy burden of Rs 4,899 crore. Revenue from sales for the quarter stood at Rs 12,521 crore, down 18% from the corresponding period last year.

HPCL has posted a net loss of Rs 422 crore during the quarter ended December 2008 as against Rs 15 crore in the last corresponding quarter the previous year. The company’s net sales increased by 8% to Rs 29,386 crore compared to Rs 27,117 crore in the same quarter a year ago.

Sajjan Jindal-controlled JSW Steel has reported a net loss of Rs 127 crore for the third quarter ended December 2008, following a foreign exchange loss of Rs 177 crore. The company has posted a net profit of Rs 355 crore in the corresponding period last financial year.

Hindustan Unilever Ltd (HUL), India ’s largest fast moving consumer goods company, has reported a 17% growth in net sales at Rs 4,308 crore for the quarter ended December 31, 2008 compared to Rs 3,687 crore in the same quarter of the previous financial year. HUL has, however, posted a marginal dip in its net profit at Rs 616 crore for the quarter ended December 31, 2008 as against Rs 631 crore in the corresponding quarter last financial year.

New York-based Pfizer Inc’s bid to buy rival Wyeth for more than $60 billion is expected to increase the level of competition for capturing the generic drugs market.

Tata Chemicals has posted a consolidated net profit of Rs 91 crore for the quarter ended December 31, 2008, whereas the same was at Rs 91 crore for the quarter ended December 31, 2007. Total income during the quarter was at Rs 3,510 crore, up from Rs 1,713 crore for the quarter ended December 31, 2007.

The slowdown in the automobile industry is worsening. India ’s largest car manufacturer, Maruti Suzuki’s third-quarter net profits had dipped by 54% to Rs 214 crore compared with Rs 467 crore a year earlier.

Tata Steel has announced that its Anglo Dutch unit Corus has signed a memorandum of understanding (MoU) to sell a majority stake in Corus’ Teesside Cast Products business in the UK . The company, however, has not disclosed the financial details of the deal to sell a majority stake in the business to Italian firm Marcegaglia SpA and South Korea ’s Dongkuk Steel Mill Co Ltd.

Kalpataru Power Transmission, a leading player in power transmission and distribution has outbit KEC ( India ), Hyundai ( South Korea ) and NCC ( Saudi Arabia ) to secure $250 million transmission order from the Kuwait ministry of energy and water. The order relates to a 172 km - 400 KV -  double circuit overhead transmission line.

In the first ever acquisition overseas, Fortis Healthcare had announced that it has bought a controlling stake in Mauritian hospital, Clinique Darne, in a joint venture with the leading Mauritian industrial group CIEL that operates in agro-industry, textiles and equity investment. Fortis, through its wholly-owned subsidiary, Novelife Ltd, has partnered with CIEL to acquire a controlling stake in Clinique Darne hospital with an investment of $7 million.

Tata Power’s net for the quarter ended December 31, 2008 stood at Rs 116 crore against Rs 197 crore in the corresponding period last year.

Tata Motors, India ’s largest automotive manufacturer has reported its first quarterly loss in seven years on a steep fall in automobile sales volumes, high material costs and foreign exchange losses. The company posted a net loss of Rs 263 crore for the third quarter of 2008-09 as compared to a net profit of 499 crore in the same quarter of 2007-08.

Indian Hotels Company Ltd (IHCL), a Tata group company that runs the Taj Hotels Resorts and Palaces chain of hotels, reported a drop of 38% in net profit at Rs 84 crore for the quarter ended December 31, 2008 compared with Rs 135 crore in the corresponding quarter last year. The company said that it was substantially affected by the terror attacks that occurred in November in Mumbai affecting its property Taj Mahal Palace and Taj Mahal Tower . Both these hotels contributes a considerable amount to the company’s total revenues.

 External Sector

Exports during December 2008 registered an annual increase of 1.1% to reach US $ 12690 million; as a result during the fiscal year so far the total exports at US$131990 million registered a growth of 17.1% over that of US $ 112737 million reported in the comparable period last year.

Imports during December were valued at US $ 20256 million, an increase of 8.8 per cent over that of US$ 18610 million in December 2007 and the cumulative import at US$ 225809 million was 31.5% more than that of US $ 171718 during April-December 2007-08.

Trade balance during December thus worked out to be $ 7567 as compared to 5785 in December 2007. The cumulative trade balance for April-December 2008 estimated at US $ 93819 million was 1.6 times to that of US $ 58981 million during April-December 2007.

While oil imports during the current fiscal year so far gone up from US $ 54421 million in April-December 2007 to US $ 78827 million , that of  non-oil imports accelerated by 25.3% to US $ 146982 million.

Information Technology

The government had decided to make all former Satyam Computer Services top executives and board members, including the independent directors, answerable for the fraud in the company on grounds that they “attempted to enrich themselves unjustifiably at the cost of the company and its stakeholders”.  

TCS has signed a $100 million (around Rs 490 crore) deal with 4Ugroup, the holding company of mobile phone retailer Phones 4U and other companies in the UK telecommunication and financial services market place.

Telecom

Spice Mobile , the handset unit of B K Modi-controlled Spice Group, has reported net loss for the December quarter at Rs 3.50 crore, while it had a net profit of Rs 6.45 crore in the same quarter a year ago.

*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project.